South By North Strategies, Ltd.

Modernizing State Finances

The N.C. Budget and Tax Center lays out a plan for modernizing the state’s revenue system.

The plan outlines how North Carolina can create a modern revenue system that improves long-term adequacy, minimizes volatility and ensures equity so that the state can invest in North Carolina’s shared prosperity. The significant flaws of the current revenue system undermine the state’s ability to fulfill its mission and support the economic recovery. Research shows that revenue reform can improve the economy’s ability to grow and innovate in the long term. Revenue reform can minimize the devastating impact of a cuts-only approach to the budget shortfall and set North Carolina on a path to economic recovery.

Around The Dial – Feb. 23

Economic policy reports, blog postings, and media stories of interest:

• Beat the Press isn’t a fan of “the right to freeload.”
• Brad DeLong argues that politics is undermining the economy.
• Economix notes that there has been no surge in government hiring.
• Felix Salmon points out that austerity’s track record is poor.

Midweek Humor

Renewed interest in transferring public assets to the private sector calls to mind this old sketch.

Fixing Unemployment Insurance

The National Employment Law Project and the Center on Budget and Policy Priorities lay out a plan for reforming the financing of state unemployment insurance systems.

States could attempt to restore the adequacy of their trust funds under current law through tax increases alone. Without the provisions in the UI State Solvency Plan for limiting tax increases (delaying when federal UI taxes increase to recoup the loans, delaying interest payments, and partial loan forgiveness), however, that approach would require sharp tax increases beginning while the economy remains weak. Compared to a hypothetical scenario (referred to here as an “adjusted baseline” scenario), in which all or nearly all states do achieve solvency by 2020 by raising state UI taxes, even as employers continue to pay increased FUTA taxes to repay the loans, the UI State Solvency Plan produces significantly lower average employer tax rates nationally. That is, raising the combined federal and state UI tax rate enough for nearly all states to achieve an AHCM of 1.0 by 2020 would produce significantly higher tax rates than would be required under the UI State Solvency Plan, especially in the next several years when the economy likely will remain weak …

Around The Dial – Feb. 22

Economic policy reports, blog postings, and media stories of interest:

• Paul Krugman thinks breaking unions is a bad ideas.
• The Washington Post reports on the state of the economy.
• Economix revisits “the value of elite colleges.”
• Naked Capitalism doesn’t like “mission enough accomplished.”